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Affluent Ethnic Investors and Risk Tolerance

2/4/2015

Investment risk is uppermost on the minds of Affluent ethnic investors. In considering an investment, more than eight-in-ten black, Hispanic and Asian investors first consider the level of risk. Compared with all other investors, ethnic investors much more prefer a guaranteed rate of return for the majority of their investments. Three-fourths of Black investors have this investment mindset, followed by 66 percent of Hispanics and 53 percent of Asians. In comparison, 49 percent of all other Affluent investors surveyed feel this way.

Affluent ethnic investors do not consider “taking risk” to be as an important factor in their financial success as they do hard work, education and frugality.

The majority of Affluent ethnic investors surveyed categorize their risk tolerance as moderate; 56 percent of Asians and half of blacks and Hispanics. Affluent Hispanic investors are most likely to term their risk tolerance to be conservative (21 percent vs. 17 percent of blacks and 11 percent of Asians.

Asian investors (40 percent) are more willing than their Hispanic (34 percent) and black counterparts to take a significant investment risk on a portion of their investments to earn a high return. Nearly three-in-ten (28 percent)—the highest percentage of Affluent ethnic investors surveyed—characterize their risk tolerance as aggressive.

Of the less than 10 percent overall who categorize their risk tolerance to be most aggressive, eight percent were black, followed by Asians (5 percent) and Hispanics (4 percent).

Affluent ethnic investors are less assured than all other investors that their advisor understands their appetite for risj (88 percent vs. roughly three-fourths of blacks and Hispanics and 65 percent of Asians.